TULIP-O-MANIA (Economic Bubble) IS BACK

Reality Zone

by G Edward Griffin

TulipomaniaTulipomania is the name given to the earliest economic bubble in recorded history. An economic bubble is a market condition in which the price of an asset is far in excess of its intrinsic value but which is willingly paid by buyers in anticipation of finding other buyers who will pay an even higher price. The bubble bursts when buyers no longer are willing to pay more for the asset than its intrinsic worth. That causes those who own the asset to lose the amount by which they previously overpaid. This drop in value happens quickly in the form of panic selling.

That is what happened in Holland between the years of 1634 and 1637. It came to pass when a rare flower called a tulip was discovered in Constantinople. When the root bulbs were brought into Holland, they became a status symbol among the wealthy ‒ much as race horses or rare breeds of dogs are today in our own society.

The price climbed steadily until tulip bulbs became, not merely symbols of status, but speculative investments. At one point, prices doubled every few days, and speculators were seen everywhere amassing great fortunes with no output of labor or service.

Many otherwise prudent people found themselves infected by the hysteria, They borrowed against their homes and invested their life savings to get in on the windfall. Contracts for future delivery of tulip bulbs ‒ a form of today’s commodity market ‒ became a dominant feature of Holland’s stock market.

Tulip bulbs became more precious than gemstones.
As new varieties were developed, the market became more complex, requiring experts to certify their origin and their grade. Prices soared, and some bulbs sold for the equivalent cost of a new automobile in today’s world.

Then, completely without warning, it was over. Overnight, there were no buyers at any price. Speculators by the thousands saw their life savings ‒ and their dreams of easy wealth ‒ disappear together. Tulipomania had come to an end. … Or did it?

Take a good look at today’s stock market and check out real-estate prices, too. You will be amazed at the similarity to the tulip market of 1636.

The talking heads on TV are giddy lately over how wonderful it is that the stock market has “rebounded” and the real estate market is “booming” once again. The truth, however, is that these are classic manifestations of economic bubbles and, like all the previous ones in history, they are destined to burst.

My friends at the Success Council, Max Wright and Jarrod Dennis, have just completed an online briefing on the imminent bursting of, not one or two, but seven global economic bubbles. They are:

► Government debt
► Stock market
► Real Estate
► Sovereign-bonds

► Derivatives
► Student debt
► Unfunded government liabilities

When bubbles burst, a transfer of wealth always takes place – from the victims to the schemers and from the unprepared to the prepared.

If you are wondering what life could be like when these bubbles burst in Europe and the US, just look at what recently has happened in the stock markets of the world and on the streets of Venezuela. When bubbles burst, the economy crashes, and when that happens, life becomes grim, indeed.

Max and Jarrod have been telling people about this scenario for years. Now, in their new, two-hour briefing, they reveal everything they have learned. The standard cost for attendance is $197. However, because of my relationship with them, they have agreed to set aside a limited number of free tickets for our subscribers. It doesn’t get any better than that.

Not to want to know about this would be a big mistake.



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